SACRAMENTO – In the wake of the passage of a bill in Wisconsin dealing with amendments to that state’s civil litigation guidelines, Luke Wake, senior staff attorney for the National Federation of Independent Business (NFIB) Small Business Legal Center, said he believes the Wisconsin legislation is “a step forward for small business.”
Wisconsin is the first in the nation to pass a bill requiring the disclosure of third-party litigation funding arrangements. Gov. Scott Walker signed the bill April 3.
Wake said the issue with small business lawsuits in California, where there is “such an issue with lawsuit abuse,” is that they are very expensive to defend, and many are therefore settled.
“You can have an entirely meritorious defense,” Wake told the Northern California Record, “(but) a lot of those claims end up being settled, even when they shouldn’t be. It really makes the justice system unaffordable for a lot of small business owners.”
Wake said he believes Wisconsin is trying to address these roadblocks through its new law, including through making changes to discovery regulations, “and that’s a good thing.”
In a blog post, U.S. Chamber Institute for Legal Reform President Lisa A. Rickard said the law "brings litigation funding out of the shadows" so funders "can’t anonymously ‘pull the strings’ of a lawsuit without other parties’ knowledge,’” the institute said.
“It’s really encouraging that (Wisconsin’s legislators) were thinking progressively about ways that they can make the judicial system more efficient and more fair for the little guys,” Wake said.
Wake said these lawsuits differ from those filed against corporations, where “it’s David versus Goliath.”
“My main point of emphasis is that it’s really disheartening when I talk to businesses,” Wake said, adding that he tells the business owners, “If everything you’re telling me is correct, you’re in the right, but you’re gonna have to spend an arm and a leg to prove that."
Wake said he knows the NFIB supported the Wisconsin bill, and that it “does seem to be a popular step forward.”
Wake said he is not sure how often the issue of transparency in litigation comes up for small business owners.
“My sense of the matter is it’s a lot more common in any context, but, in any event it does seem to make sense that there should be some transparency there…for the benefit of the courts,” he said.